The brutal World War of 1914-1918 left much of Europe devastated and destitute. The gruesome totals were more than eight million dead, as both sides in the conflict lost the better part of an entire generation of males. The Allies had accumulated vast national debts of seemingly unmanageable proportions. In contrast, the United States suffered comparatively few combat deaths and emerged from the war with a significantly stronger economy. The profits from arms sales to the Allies were in the billions of dollars, and in the first decade after the war America accounted for nearly half of the world's industrial output.
Following the Versailles Treaty, the United States was thrust into the unfamiliar role of a world leader. Ultimately, American and European diplomats failed to maintain the peace, but it was not for want of trying. The U. S. Senate did refuse to join the League of Nations and the World Court, and during the 1920s America increasingly turned inward to deal with domestic issues and hemispheric affairs. Congress reflected this mood by passing restrictive immigration laws. But despite the influence of isolationists and "100% Americans," the United States took the initiative in attempting to secure international peace and world order through diplomatic means.
The United States twice proposed an international law court at Hague conferences before the Great War, but the World Court was based on arbitration. Secretary of State Charles Evans Hughes persuaded President Warren G. Harding to seek the Senate's approval to join the World Court, but the opponents to the Versailles Treaty blocked ratification. Despite this, Americans—including Hughes and another secretary of state, Frank Kellogg—served on the World Court. Furthermore, American observers were sent to the League of Nations, and the United States joined in several League-sponsored social programs, including those directed against international "white slavery," or prostitution, and illegal drug trade.
The United States was at the center of the complicated economic issue of war reparations and debts. The Versailles Treaty included a "War Guilt" article that claimed Germany was solely responsible for the World War. Two years later, an Allied commission saddled Germany with a reparations bill of about $33 billion, to be paid off at the rate of five billion gold marks per year. The German government, however, soon found it impossible to pay the reparations in gold and began printing paper money. This led to insurmountable inflation, wiping out the savings of the frugal middle class, and Germany defaulted on its annual payments. In the meantime, the congressionally-appointed World War Foreign Debt Commission placed the Allied debt to the United States at more than $22 billion, including interest.
Unfortunately, the global economic situation worsened during the 1920s and the Allied nations were unable to pay their U.S. debts after Germany defaulted on its reparation payments. When Congress insisted on the debt payments, European nations began portraying the U.S. as "Uncle Shylock," in large measure because most of the borrowed money had been spent in this country on armaments and agriculture products. Additionally, high American tariff barriers made it even more difficult for the debtor nations to establish a favorable balance of trade. In response, Charles G. Dawes, a Chicago banker, devised a plan to reduce Germany's annual reparations payments. Five years later, Owen D. Young, chairman of General Electric, headed a commission that lowered the annual payment to virtually the identical sum that the other European nations owed the United States. Germany and the European nations were able to resume paying off their U.S. debt until the global economic system collapsed with the Great Depression.
In late 1931, President Herbert Hoover put a one-year moratorium on both the reparations and debts payments. When European nations proposed to cancel 90 percent of Germany's reparations if the United States similarly lowered their debt payments, Congress refused. Some nations made an effort to meet their obligations when the moratorium expired, but in the end only Finland paid its debts in full.
In the wake of the World War, the United States pushed for an agreement on naval disarmament. Many felt the World War was caused by an armaments race in Europe and, with this in mind, the Republican administrations participated in several significant international naval conferences. The timing was right for such an initiative since the carnage of the Great War led to a revulsion against the use of military force to settle disputes between nations. Additionally, Americans were interested in protecting their empire in the Pacific without an expensive naval build-up. The British likewise wished to avoid the massive expenditures needed to maintain their supremacy on the high seas, and the Japanese sought to divert most of their military budget to ground forces in preparation for action on the Asian mainland.
After Congress overwhelmingly approved a naval disarmament resolution introduced by William Borah, a leading isolationist and chairman of the Senate Foreign Relations Committee, President Harding invited nine nations to attend the Washington Conference. Secretary of State Hughes stunned the conferees at the first session in November 1921 with his sweeping proposals for naval disarmament. He called for a ten-year moratorium on the construction of the largest warships, and declared that the United States was prepared to scrap 30 vessels under this plan. Hughes drew tremendous applause—even tears from some of his listeners—and, more importantly, his proposals were incorporated into a series of treaties.
The Four Power Treaty of 1921 between the United States, Great Britain, Japan, and France, prohibited new fortifications throughout most of the Pacific. The Five Power Treaty, signed the following year, included Italy. It set a limit for battleships based on a 5:5:3 ratio that gave the United States and Britain the most tonnage, but allowed the Japanese to become the dominant power in the western Pacific. (The ratio for France and Italy was 1.67.) The London Naval Conference of 1930 extended the moratorium on capital ships for another five years. Further attempts at disarmament—at Geneva in 1932 and London in 1935—ended in failure, however, due to the growing distrust and insecurity that erupted into the Second World War.
During the 1920s, an assortment of intellectuals, isolationists, and pacifists sought to prevent future wars by prohibiting the use of military force to settle international disputes. James T. Shotwell, a professor of international relations at Columbia University, wrote an influential essay calling upon all nations to "outlaw war" by making it illegal. In early 1927, French Foreign Minister Aristide Briand, hoping to capitalize on this growing sentiment in the United States, extended a public invitation to Secretary of State Kellogg to join in a mutual defense treaty. Kellogg at first ignored Briand's invitation, realizing that it was directed against Germany, but public pressure mounted from a petition drive that collected more than two million signatures. Determined not to be painted into a corner by Briand, Kellogg deftly employed Shotwell's proposition. He called upon all countries to declare war unlawful.
In August 1928, the Kellogg-Briand Pact was signed in Paris. Ultimately sixty-two nations joined in renouncing war as "an instrument of national policy" and supporting "pacific means" to settle international quarrels. Among the signatories were representatives from Germany, Japan, and Italy. The U.S. Senate overwhelmingly ratified the Kellogg-Briand Pact, but most senators were not naïve enough to believe their vote was anything more than a symbolic gesture. It was soon made clear that the efforts of both international idealists and diplomatic realists ignored the fundamental causes of conflicts among nations.